By Adam Levine
Palantir Technologies posted a big beat in its first quarter results on Monday afternoon. Shares rose in after-hours trading.
Earnings per share were up annually by 75% to 14 cents, compared to Wall Street's consensus estimate of 11 cents, according to FactSet. Revenue for the quarter reached $828 million, above expectations of $776 million and up 36% on the year.
Palantir's revenue outlook for the first quarter came in well above expectations at $858 million to $862 million, up 36% from 2024 at the midpoint versus a $799 million analysts' estimate.
Palantir stock was up around 136% in late trading following the release.
This is breaking news. Read a preview of Palantir's earnings below and check back for more analysis soon.
Palantir earnings are typically a high stakes affair. And the rally in the stock to a recent $82 has raised the stakes even more for the fourth-quarter report due after the market's close on Monday.
Wall Street analysts mostly take a dim view of Palantir's stock price, with an average target price of $51, ranging from $11 to $90, according to FactSet. Most analysts have the equivalent of a Hold or Sell rating on the stock; out of 18 analysts, there are only two Buy ratings.
"Analysts cannot get a good handle on what the total addressable market is," Morningstar analyst Mark Giarelli says. "Theoretically Palantir can help almost any company in the world that utilizes data, but what will actually materialize is ambiguous and anyone's best guess."
With a price-to-earnings ratio of 173 for the next 12 months, Palantir has to keep proving analysts wrong, something it has done for over four years. In the 17 reporting periods since it became public, Palantir has beaten the analyst consensus for sales in all but one quarter, by an average of 2.4% per period.
Most analysts may take a skeptical view of Palantir's pricing but they are also largely in agreement that it's a fast-growing company with strong growth prospects. Sales in the last 12 months are up 25% from the year before, and EPS is up 67%.
For the fourth quarter, analysts are forecasting earnings per share of 11 cents, up 39% from the year before, and sales of $776 million, up 28%.
Morningstar's Giarelli, who has a Buy rating and a price target of $79 remains a fan of the stock. "I am quite bullish on Palantir's future and my base case is that this company will have a growth profile similar to Salesforce in the late 2010s," he told Barron's. "This aggressive growth profile is essentially what the market is pricing in at this time, and I don't think the market is wrong."
Over the last 20 years, Salesforce revenue has grown at a 34% annualized rate. Like Palantir, it is also a frequent beater of analyst consensus.
Palantir began as a government contractor to help agencies make sense of a flood of data, but it now has a healthy commercial business, making up 46% of companywide revenue in the last 12 months.
Companies, especially large ones, produce a ton of data, and have to make sense of it to understand their businesses better and improve productivity. Some of these large companies have multiple fragmented IT systems, the result of decisions made years ago.
Write to Adam Levine at adam.levine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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February 03, 2025 16:19 ET (21:19 GMT)
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